Energy Mad Earnings Warning

Energy Mad's founders during the IPO, CEO Dr Chris Mardon at right

The recently listed lightbulb manufacturer Energy Mad has had a significant setback on the sharemarket, falling 35.7% or 25c to 45c in first reaction on the surprise announcement it will miss earnings targets this year.

The shares recovered to 55c at the close , down 21.4% on the day.

Brokers expressed disappointment at the revision so soon into the company’s listed period.

Recent delays in the production of the new Ecobulb Downlights and getting the updated spiral accreditation in Australia, combined with higher than anticipated freighting costs and foreign exchange revaluations, will reduce Energy Mad's FY2012 EBITDA to approximately $1.1 million from its IPO forecast of $3.5 million.

Managing Director Chris Mardon said that significant recent production delays for new Ecobulb Downlights for the Australian market will mean that a major customer order forecast to be filled before March 2012 will now not be filled until early in the new financial year.

"We were disappointed to be advised so recently of production delays with the new Ecobulb Downlights and have since addressed the underlying issues with the factory. It is important to note that the revenue from this order will be deferred, not lost, as the customer order remains in place."

Energy Mad holds a 20% stake in its China-based production facility. Dr Mardon explained that while Energy Mad was well advanced in gaining 20,000 hour accreditation (up from its current 15,000 hour accreditation) for its Ecobulb Spirals in Australia, it had not been achieved within the anticipated time frame and this had delayed projected sales to some customers.

"We expect to gain that accreditation by May 2012", he said.

Dr Mardon also explained that Energy Mad had implemented an improved pricing methodology to avoid future unexpected freight costs, and had increased the Ecobulb Downlight customer prices.

Furthermore, while recognized on the financial results, foreign exchange revaluations on do not involve any cash and tend to be volatile.

Energy Mad will report again to the market following its January results and a review of orders and production schedules for the remainder of the year.

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